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AMD Eats Another $880 Million on ATI Buy

AMD Eats Another $880 Million on ATI Buy

Advanced Micro Devices stirred up the computing industry back in 2006 when it bought graphics developer ATI in a deal valued at over $5 billion. But the deal didn’t work out as well as AMD hoped, and in late 2007 the company finally admitted it paid too much for ATI and would be forced to write down the value of some of the assets acquired in the deal—although the company initially hedged on providing actual numbers, the figure came to about $1.7 billion. Now, in a filing with the Securities and Exchange Commission, AMD has revealed that it will be taking another charge of about $880 million on the deal.

AMD attributes the writedown to underperformance of ATI’s handheld/mobile and digital television technologies—which, in an ironic way, may mean that the company’s desktop and notebook graphic groups are actually meeting AMD’s fiscal expectations. AMD will take the charge in the second quarter of this year. Overall, the new charge means AMD has written off almost half the value of the $5.4 billion it sunk into ATI less than two years ago.

The overall impact of the charge on AMD’s bottom line remains to be seen: the company is putting money into employee severance plans, but also plans to sell off 200nm chip manufacturing equipment, the value of which could give the company a one-shot revenue boost that could even put its second quarter into the black.

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